The Chamber of Independent Power Producers (IPPs) has said it will not agree to plans by the government to restructure a $1.3 billion debt owed its members.
In a letter to Finance Minister Ken Ofori-Atta, the Chamber said: “We emphasise that our members reject any notion of restructuring their arrears/claims, as part of the ongoing or any future debt restructuring programme”.
“Our members are prepared to engage with the government on payment schedules with regard to the arrears and other claims under the respective PAs, in order to promote predictability of payment flows while the energy sector reforms take hold to eliminate any accumulation of arrears going forward”, the letter noted.
“We would like to advise that you prioritise and make payments of the arrears in the next three weeks to enable our members to meet their debt obligations and sustain our production of electricity”, the IPPs proposed.
“As indicated in your letter, our outstanding and overdue receivables from the Electricity Company of Ghana (ECG) have reached a critical point, for which we cannot guarantee continuous generation in the coming months”.
“As of January 31, 2023, our members’ total receivables accrued is over the cedi equivalent of $1.3 billion. Nonetheless, our members, in good faith, have continued to honour their contractual obligations to ECG, which is not sustainable”, the IPPs added.
The Chamber added: “We, herein, bring to your attention that some of our members are in default of their debt service obligations with some quarterly debt service obligations due from March 2023”.
“Kindly note that our members cannot continue defaulting on their respective debt service obligations and sustain operations”, the group indicated.
Additionally, it said: “We wish to highlight that our members have accrued huge arrears with their suppliers for which they are already in default and accruing associated penalties”.
The Chamber also said the Cash Waterfall Mechanism (CWM), which was meant to bring transparency and fairness in the disbursement of the power sector revenue, was a failure.
“The CWM committee is dominated by the representatives of the State-Owned Enterprises (SOEs), VRA, ECG, and GRIDCo, rejecting our proposal for IPs to be represented on the committee”.
“The only information members receive are the bank credit alerts even though they are key stakeholders controlling over 50% of the market share”.
“While we welcome the indication in your letter that review of the CWM will be part of the critical energy sector reforms, we emphasise that above-stated issues of transparency and governance of the CWM must be part of the agreed reforms and the Chamber duly represented on the CWM committee”.